Standard-rated (5%)
The default rate. Most goods and services supplied in the UAE are taxed at 5%, and you charge this VAT to your customers and pay it to the FTA (less input VAT you can recover).
Tax guide · UAE
UAE VAT: the complete guide
Everything UAE businesses need to understand Value Added Tax — what VAT is, the rates that apply, when you must register, and how to file the VAT 201 return correctly with the Federal Tax Authority.
What is VAT in the UAE?
Value Added Tax (VAT) is an indirect tax on the consumption of goods and services. The UAE introduced VAT on 1 January 2018 at a standard rate of 5%. It is collected in stages across the supply chain: VAT-registered businesses charge VAT on their taxable sales (output VAT), reclaim the VAT they pay on business purchases (input VAT), and pay the difference to the Federal Tax Authority (FTA).
In practice, a registered business acts as a collector for the government. The tax ultimately falls on the final consumer, but every registered business in the chain is responsible for charging, recording, reporting, and remitting VAT correctly. Getting the mechanics right — rates, invoices, records, and returns — is what keeps you compliant and avoids penalties.
This guide covers the essentials for UAE businesses: the rates, the registration thresholds, the VAT 201 return, filing through EmaraTax, deadlines, record-keeping, and the mistakes we see most often.
The three VAT categories: standard, zero-rated, and exempt
Every supply you make falls into one of three categories. Classifying supplies correctly is the single most important step in getting VAT right, because it drives both what you charge and what input VAT you can recover.
Zero-rated (0%)
VAT is charged at 0% on specified supplies such as certain exports outside the GCC, international transport, and defined healthcare and education. You still report these and can recover related input VAT.
Exempt
Certain supplies — such as specified financial services, bare land, and local passenger transport — are exempt. No VAT is charged, and input VAT on exempt-related costs generally cannot be recovered.
VAT registration thresholds
Whether you must register depends on the value of your taxable supplies and imports. There are two thresholds:
AED 375,000
Mandatory registration
You must register when taxable supplies and imports exceed AED 375,000 over the previous 12 months, or when you expect to exceed it within the next 30 days.
AED 187,500
Voluntary registration
You may register voluntarily once your taxable supplies or taxable expenses exceed AED 187,500 — useful for start-ups that want to recover input VAT early.
Both thresholds are tested on a rolling basis, so you should monitor your turnover continuously rather than only at year-end. For a deeper look at how the thresholds are measured, see our VAT registration threshold guide.
The VAT 201 return and EmaraTax
UAE VAT is reported on a return called the VAT 201, submitted to the FTA through the EmaraTax portal — the FTA’s online tax platform. The VAT 201 summarises the tax period: your output VAT on standard-rated sales, your zero-rated and exempt supplies, the input VAT you are recovering on purchases, any adjustments, and the resulting net VAT payable or refundable.
Your tax period determines how often you file: the standard period is quarterly for annual turnover below AED 150 million and monthly for turnover of AED 150 million or more (the FTA may assign a different period). Everything is done online through EmaraTax: you log in, complete the return, submit it, and pay any VAT due.
Output VAT — the 5% you charged on standard-rated sales.
Input VAT — recoverable VAT you paid on business purchases.
Net VAT — output VAT minus input VAT: what you pay or reclaim.
For a box-by-box walkthrough, read how to file a VAT return in the UAE.
Filing and payment deadlines
Both the return and any VAT payment are due by the 28th day of the month following the end of your tax period. For a quarterly period ending 31 March, for example, the VAT 201 and payment are due by 28 April.
If the 28th falls on a weekend or public holiday, the deadline moves to the next business day. Filing or paying late can trigger FTA penalties, so it pays to prepare the return in advance and keep your books current throughout the period rather than scrambling at the deadline.
Records and common mistakes
UAE VAT law requires you to keep proper records — tax invoices, credit notes, import and export documentation, and accounting records that support every figure on your return — for the statutory retention period. Good records are not just a legal requirement; they are what lets you recover input VAT and stand behind your numbers if the FTA reviews them.
These are the errors we see most often among UAE businesses:
- Registering late — the AED 375,000 threshold is tested on a rolling basis, not just at year-end.
- Treating zero-rated and exempt as the same — they are reported differently and affect input-VAT recovery differently.
- Recovering input VAT without a valid tax invoice or on blocked items such as certain entertainment.
- Missing the 28th-day deadline for filing and payment of the VAT 201 return.
- Keeping incomplete records — UAE law requires you to retain tax records for the statutory period.
How AIMuhaseb helps
VAT that keeps itself up to date
AIMuhaseb applies the right VAT treatment as you record each transaction — standard 5%, zero-rated, or exempt — and keeps a running view of your output and input VAT. When your tax period ends, it generates an FTA-ready VAT 201 from your books, with every figure traceable back to its source entry, so you file with confidence and keep the records the law requires.
Automatic 5% / zero-rated / exempt handling
FTA-ready VAT 201 from your ledger
Input vs output VAT tracked in real time
Audit trail and records retention built in
FAQ
UAE VAT questions, answered
What is the VAT rate in the UAE?
The standard VAT rate in the UAE is 5%. Some supplies are zero-rated (taxed at 0%, such as certain exports and international transport) and some are exempt (such as specified financial services and bare land). Most everyday goods and services are standard-rated at 5%.
When do I have to register for VAT in the UAE?
Registration is mandatory when your taxable supplies and imports exceed AED 375,000 over the past 12 months, or when you expect to exceed that figure in the next 30 days. You can register voluntarily once you exceed AED 187,500 in taxable supplies or expenses.
What is the VAT 201 return?
VAT 201 is the standard UAE VAT return, filed to the Federal Tax Authority (FTA) through the EmaraTax portal. It reports your output VAT on sales, input VAT on purchases, any adjustments, and the net VAT payable or refundable for the tax period.
When is the VAT return due in the UAE?
The VAT 201 return and any payment are due by the 28th day of the month following the end of your tax period. The standard tax period is quarterly for businesses with annual turnover below AED 150 million and monthly for turnover of AED 150 million or more (the FTA may assign a different period). If the 28th falls on a weekend or public holiday, the deadline moves to the next business day.
What is the difference between zero-rated and exempt supplies?
Zero-rated supplies are taxable at 0% — you report them and can generally recover the related input VAT. Exempt supplies carry no VAT and generally do not allow you to recover input VAT on costs linked to making those supplies. The distinction matters for both reporting and recovery.
How do I file a VAT return in the UAE?
You file the VAT 201 through the FTA’s EmaraTax portal by entering your output VAT, input VAT, and adjustments for the period, then submitting and paying any net VAT due by the 28th-day deadline. See our step-by-step guide on how to file a VAT return in the UAE for the box-by-box detail.
Keep exploring UAE VAT
How to file a VAT return
Step-by-step on EmaraTax, box by box.
Registration threshold
When AED 375k and AED 187.5k apply.
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VAT filing services
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Tax glossary
Plain-English definitions of key terms.
Handle VAT in AIMuhaseb
Get started and generate a VAT 201 from your books.
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